Pros and Cons of Staff Augmentation in 2024

Pros and Cons of Staff Augmentation in 2024

Staff augmentation is a time-tested, proven staffing model to consider as a potential addition to your organization’s flexible talent management plan. It’s designed to temporarily supplement an in-house team with qualified resources, and can be a cost-effective way to meet project deadlines and objectives and address skill set gaps.

The recent Silicon Valley layoffs, bank collapses, and economic uncertainty highlight the need for companies to have the flexbility, agility, and responsiveness to adapt to changing market dynamics and customer expectations.

Part of achieving this resiliency is assessing flexible talent management strategies to address short-term staffing needs and provide a functional framework to add and remove staff in an efficient, timely, and cost-effective manner. There are a few ways to accomplish this. Staff augmentation is one that has proven itself successful.

What is staff augmentation?

Staff augmentation means outsourcing certain roles on your team to include additional talent—essentially, expanding your in-house team by tapping into an additional talent pool.

A staff augmentation model is a great solution for businesses needing short-term help completing a project. An augmented staff helps companies meet their current business needs without the added expense of full-time employees.

These short-term engagements are usually paid by the hour and filled through a staff augmentation company, outsourcing company, or even an online talent platform. Initially, staff augmentation was practiced by the IT industry and tech startups to address a lack of tech talent in an ever-expanding industry that included general IT, software development, and cybersecurity.

Over the years, staff augmentation has expanded beyond these sectors and grown along with the global staffing industry. According to a Staffing Industry Analysts market report, the global staffing industry (one of the main providers of staff augmentation) generated $212B in 2022 alone.

In part, this associated market expansion happens because staff augmentation can apply to almost any industry today as a cost-effective way to address short-term staffing needs. For example, marketing executives and managers are choosing staff augmentation as a creative way to temporarily add production capacity to their existing team for a new marketing campaign, product launch, or rebranding initiative.

An example is Woodruff Sawyer, one of the largest insurance brokerage and consulting firms in the United States. The company chose an augmented team to expand its marketing talent with additional bandwidth to undertake a major rebranding initiative with great success.

Different staffing models compete with staff augmentation, such as traditional outsourcing and managed services. Understanding the difference is important. With both traditional outsourcing and managed services, businesses compensate contracted labor based on deliverables and specific outcomes (versus by the hour). With outsourcing services, your company is less involved in the day-to-day execution of desired deliverables.

Staff augmentation is often a successful solution for filling temporary gaps. Businesses may require additional staffing for a variety of reasons.

For example, a software development company might take advantage of IT staff augmentation to add highly skilled software engineers and other IT professionals to their in-house development team. This could address a skills gap that exists on the current team. Or they may simply need to boost their numbers to manage additional workflow to complete a project on time.

We can see another example of staff augmentation in the health care industry. In many hospitals and offices, additional short-term nurses and other qualified personnel can help with surges in patient volume.

Although staff augmentation works well for many companies, as with any organizational hiring strategy, it has both advantages and disadvantages. Knowing the pros and cons helps businesses adopt the staffing strategy that will work best for their organization.

Before deciding if it’s right for you, consider some of the benefits of staff augmentation.

Pros of staff augmentation

Staff augmentation services offer a flexible, creative solution for increasing resources within an existing dedicated team for greater short-term capacity. It also provides a swift way to bring in talent that fills a skill set gap without a long-term employment commitment. Other advantages include intangible benefits, such as keeping in-house teams focused on production and deliverables versus worrying about new hires with more skills replacing them.

For many organizations, the benefits of choosing staff augmentation are varied and compelling. These benefits include:

  • Expertise. Staff augmentation can be an ideal solution when a project requires specific skill sets your current organization lacks. It’s especially effective if you don’t require these skills on a long-term basis—otherwise, it may be better to hire a permanent staff member with those skills.
  • Quickly scale personnel up or down. The ability to swiftly and efficiently scale resources in any direction on demand is a major benefit. Staff augmentation helps add resources when and where you need them, even scaling down when necessary without impacting the core business.
  • Staffing flexibility. Staff augmentation generally makes it easier to add to an existing team more quickly and efficiently. Once a staff augmentation provider or an online talent platform understands a company’s needs, they can choose from a large talent pool and provide the best skill-based match. Staff augmentation also makes it easier to replace people who are underperforming or simply don’t fit the job.
  • Cost reduction for training. Onboarding new direct hires for your internal team requires time and company resources. With staff augmentation, one of the objectives is to boost the current workforce as seamlessly as possible. The goal is to supplement full-time employees with people possessing different skills for a period of time rather than onboarding and assimilating new hires.
  • Internal acceptance. Let’s face it: Employees may feel threatened when a new permanent hire comes on board—especially if they possess a sought-after skill set that meets current project or program needs. Staff augmentation adds talent on a temporary basis to alleviate this concern.
  • Overhead cost savings. Depending on multiple variables, experts estimate that employees with a full suite of benefits typically cost 1.25 to 1.4 times their salary. And for on-site employees, hiring may also require more office space. Taking on a temporary resource via staff augmentation enables a company to circumvent certain long-term costs and overhead.
  • Engaging on a trial basis. Sometimes hiring a new employee with the right skill set makes sense, especially if a short-term project becomes a long-term program. Staff augmentation can be a great tool in the recruitment process, enabling companies to try out potential team members before hiring them. This allows the company to see if it really needs to hire another employee and to determine if the individual is a good fit for the current team and the company culture as a whole.

Cons of staff augmentation

As great as staff or team augmentation sounds, it’s not perfect for every scenario. Staff augmentation requires changes and additions to internal processes and tools compared to standardized processes developed for direct hires.

Plus, issues can arise when staff augmentation turns into a default solution, with companies outsourcing team members for even long-term projects. This can create higher costs (and higher risks) when a service-level commitment is not fully defined. It’s essential to have a well-defined service level agreement that outlines the expectations and responsibilities of both parties involved.

  • Oversight and management. Any expansion of a team and resources requires oversight and processes. This includes temporary workers added via staff augmentation.
  • Onboarding external talent. Staff augmentation onboarding typically takes less time and effort than hiring employees. That said, it will involve some level of commitment.
  • No institutional knowledge. Some projects require a depth of historical knowledge only existing employees have, so they may have to educate temporary workers depending on the project.
  • Higher long-term labor costs. When using staff augmentation, businesses must pay the placement agency and the workers. Over time, staff augmentation contractors may cost more than permanent staff performing the same job function. In the short term, the reduction of hiring/de-hiring costs may offset the increased labor cost.

Is staff augmentation right for your organization?

Reviewing augmented team models and comparing competing staffing models is important when deciding if it’s the right solution for you. Consider the managed services and project outsourcing models.

Start by carefully assessing and defining your company, departmental, or project management goals, as well as your staffing requirements, skill gaps, and budget. Consider risk exposure contingencies, project timelines, milestones, hard deliverables, and your company culture and structure. Will one or more of these staffing models fit into the existing framework more easily, or will it require changes in oversight, management, and/or processes? If so, identify requirement variances among the models.

Based on the information and data gleaned through this kind of comparison and analysis, a preferred staffing model will likely emerge. Keep in mind it may vary from project to project. Spending time upfront to complete a thorough needs and solution evaluation will help ensure the decision you make is the best one.

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Pros and Cons of Staff Augmentation in 2024
The Upwork Team

Upwork is the world’s work marketplace that connects businesses with independent talent from across the globe. We serve everyone from one-person startups to large, Fortune 100 enterprises with a powerful, trust-driven platform that enables companies and talent to work together in new ways that unlock their potential.

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